Unicorns exist not only in fairy tales, but also in business. We tell you what the meaning of unicorns is. And no, we're not talking about a rainbow horse with a horn on its forehead.
A unicorn in business is a private startup which is worth more than $1 billion.
The name was coined by Aileen Lee. She wrote in her article that the chance of a startup becoming worth 1 billion is as small as finding a unicorn. So the idea is that such successful startups are as rare as the mythical animals. The name unicorn has stuck and the rest is history.
Unicorns are often tech startups that have come up with something very innovative. Examples of (former) unicorns are Uber, SpaceX, Deliveroo, WhatsApp and Reddit.
Many famous unicorns already have a dream exit realised. Often they are taken over or they go on the stock exchange. Then they are no longer a unicorn, because they are no longer a private company.
A characteristic of many unicorns is that they grow quickly because they introduce a disruptive technology: through their service, current superpowers are bypassed. The startups are often cheaper or more user-friendly than the established order.
There are also private startups worth more than $10 billion. They are also called decacorns. Not surprisingly, they are even less common than unicorns.
The future of unicorns
Opinions are divided about the term unicorn. They are not nearly as rare as they were 10 or even 5 years ago. Some therefore think that the term does not actually cover the load anymore.
Just look at this timeline. Until 2013, unicorns were indeed very rare. But as of 2014, the number of private startups worth more than $1 billion is exploding.
This infographic is a bit dated, but I can assure you that the increase has not diminished. In recent years, the number of Chinese unicorns has increased significantly.
It is therefore not surprising that analysts think that unicorn no longer covers the load.
But on the other hand: of all startups that arise, the percentage that reaches the magical limit of 1 billion is still minimal. So in that respect we think that unicorns still live up to their mythical status.